Employee Benefit Views

RAND study reveals catch-22 among HDHP members

Posted April 6, 2011 by By Kelley M. Butler at 02:11PM. Comments (12)

A few days ago over breakfast, my husband was perusing a job posting in his field. The company that posted the ad boasted a high salary, opportunities for advancement, a collegial work environment and a telework policy. After he finished reading the ad aloud, we looked at each other and said in unison, "What’s the catch?"

There’s always a catch, isn’t there? In the case of that job posting, the jury’s still out.

But there’s definitely a catch in the new study results from a team of RAND health researchers who assessed the spending patterns and health care use of high-deductible health plan participants.

The research, according to RAND, is the largest-ever assessment of HDHPs, studying more than 800,000 individuals during 2004 and 2005. 

The good news from the study affirms what we already know about HDHPs: they make users spend less on health care.

Health spending for families with a deductible of $500 per person or more dropped an average of 14% when compared with similar families in traditional health plans, RAND reveals.

In addition, cost savings increased even more for enrollees in plans with a deductible of at least $1,000 per person, and held steady when employers made moderate account contributions.
What’s the catch? It’s that as families reduced medical spending, they also dropped preventive care. Rates for childhood vaccinations, mammography, cervical cancer screening and colorectal cancer screenings all dropped among families with HDHPs — which is particularly head-scratching and troublesome, since most HDHPs waive the deductible for these types of care.

So, what gives? RAND researchers say "high deductibles may deter patients from seeking care for health problems that would prompt a referral for some preventive or screening procedure. Some patients may have sought preventive care outside their plan — through an immunization clinic, for example. Finally, first-year enrollees might not have understood that their deductible was waived for preventive care. It is possible that over time individuals will become more familiar with plan provisions, including benefit designs that encourage the use of preventive services."

What do you think of RAND’s findings? Are HDHPs destined to experience this type of catch-22 or can consumer education overcome such issues? And does it even matter, since PPACA requires plans to waive deductibles for preventive care anyway? Share your thoughts in the comments.


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Posted by: Alan P | April 7, 2011 3:32 PM

So many comments, so little time.To "Catch 23" - if you have a self-funded plan and want things paid a certain way - instruct your plan administrator to do so. They can program their systems to pay for things the way YOU want them to be paid. It is your plan and your money. Step up and get the body that creates CPT codes to create additional codes for procedures that start off a preventive but turn into something more so they can be differentiated. Be open with your employees. Tell them that there may be problems and why. But make sure that in the end things get paid the way you want them to.Providers are operating under governmental and insurance rules and regulations that limit how much leeway they have. Bend the rules too often and you are labeled a "bad apple", with all the negative consequences that entails. As far as something being "fishy" with the RAND study, this study exhibits the problem of all really thorough health economics research. It takes years from when a study is conceived to when it is completed and published in peer reviewed journals. Market, legislative, and other conditions may change radically, but the research cannot. Government policy today, when based on solid research, often solves yesterday's problems because that is the data that is available.

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Posted by: Terrie S | April 7, 2011 3:08 PM

How about "Catch-23"? Catch-23 occurs when particpants would like to (and should) seek preventive care, but are afraid to do so because they've received "unexpected cost" warnings from friends, family, co-workers, H.R. representatives and even the healthcare professionals themselves. Example: During the course of a preventive-care colonoscopy, a polyp is discovered that requires further diagnostic testing and surgical removal; of course, the removal is done during the colonoscopy procedure---and surprise!...what started out as a fully covered preventive-care procedure, quickly changes to a diagnostic/surgical procedure that is now subject to out-of-pocket deductible and co-insurance charges. Yes, the doctors warn patients of that possibility, but when the average out-of-pocket cost for a diagnostic colonoscopy can run around $1,200, it can still be a shock to the system and the wallet. Personally, I think the removal of a colon polyp is about as preventive as you can get (literally prevents colon cancer), thus, should be fully covered; but the devil is in the details when it comes to benefit design, policy verbiage and claim processing. In addition to the fear of sticker shock, there is also the psychological factor...the fear the doctors will actually find something serious that will disrupt every aspect of a person's life---professionally, personally, spiritually, financially, emotionally, physically, etc. Yes, Virginia, denial can be a river in Egypt.

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Posted by: Virginia W | April 7, 2011 3:00 PM

I agree with the previous comments about the deductibles not being in sync with HSA compatibility and it does somewhat discredit the findings, but our company has noticed employees not using preventative care that used to be a given under with copays since we switched everyone to our HDHP/HSA plan. Not because they don't understand that it's covered at 100% but with real-world experience the providers have put a bad taste in their mouth by coding preventative visits as diagnostic if they had to discuss an existing issue. Rather than separating a bill to keep the patient only paying for what they should. Then, trying to turn a claim around say on a physical that involves labs, x-rays, etc. all from different providers can turn into a nightmare. Thus pushing our people who really need the check-ups to just save the benefit for when they are no longer well and then it might be much more costly for our plan and for them!

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Posted by: William P | April 7, 2011 3:00 PM

The next step...what is the impact of CDHP on absence and on-the-job performance? These health outcomes that are so important for employers and their employees. Does CDHP foster appropriate, timely treatment that keeps employees at work or returns them as quickly as possible? Or, do workers delay treatment and do without medications due to the higher costs, thus exacerbating lost time or on-the-job performance while ill?

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Posted by: David E | April 7, 2011 2:27 PM

The Rand Corporation is obviously credible, but something does not seem right. In 2004 and 2005, they talk about deductibles of $500 or more (costs drop 14%), and $1000 or more (costs are reduced more). These would not, it seems to me, be HSA compatible plans per the IRS. Back then, minimum deductibles were $1100 I believe. Perhaps, then, preventive care was not free under these plans, which would be typical of HDHPs that are not HSA copatible. I think there may be a flaw in this study.

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